The topic of “legal system abuse” has been on the minds of many business leaders as well as their insurance carriers that cover their legal losses and defense costs.
The issue impacts businesses of all sizes and across industries. It should be of concern to all business leaders in North Texas.
The U.S. Chamber of Commerce blames legal system abuse for the rising costs of civil lawsuits, specifically lawsuits alleging personal injury or other tort claims.
Some of these abusive practices may contribute to large “nuclear verdicts” that can unfairly cripple a business and leave even an established insurance company in a weakened financial position.
Beyond nuclear verdicts, the chamber believes abusive practices are responsible for a broad spike in the costs associated with lawsuits. National tort costs, which run in the hundreds of billions, are rising faster than both the rate of inflation and the growth of the economy as measured by the gross domestic product, or GDP.
The Chamber specifically points to certain types of advertisements for legal services as an abusive tactic. The chamber also points to the rise of third-party litigation funding.
Third-party litigation funding is the practice of an investor fronting the costs for a plaintiff to pursue a lawsuit. In exchange, the investor gets a cut of any compensation the plaintiff earns from the lawsuit.
The front line of legal system abuse is defense counsel
Businesses and insurance carriers across the country are banding together to respond to these trends that continue to cut into their bottom line.
In Texas, much of the battle will be fought in the legislature, although some courts across the country are considering broad action.
Nevertheless, the legal defense team for a business being sued remain on the front lines of this battle. Quality defense counsel ensures that businesses and injured people alike get treated fairly both in the Texas justice system and in the federal courts serving this state.